BRUSSELS, Belgium, June 23, 2024 (BSS/AFP) - EU and China trade chiefs held "candid and constructive" talks on Saturday over plans from Brussels to ramp up tariffs on Chinese electric cars, and the two sides will hold further consultations, the EU said.

The European Union warned this month that it would slap additional tariffs of up to 38 percent on Chinese electric car imports from July after an anti-subsidy probe, in a move that risks provoking a bitter trade war.

An EU spokesman said European trade commissioner Valdis Dombrovskis and China's Commerce Minister Wang Wentao "had a candid and constructive call on Saturday on the EU's anti-subsidy investigation into battery electric vehicles produced in China".

"The EU side emphasised that any negotiated outcome to its investigation must be effective in addressing the injurious subsidisation," spokesman Olof Gill said. 

"The two sides will continue to engage at all levels in the coming weeks."

China's commerce ministry wrote on X that the two sides "agreed to start consultations" during the call.

Brussels angered Beijing by launching the investigation last year in a bid to defend European manufacturers in the face of a surge of cheaper Chinese imports.

The European Commission has now proposed a provisional hike of tariffs on Chinese manufacturers: 17.4 percent for market major BYD, 20 percent for Geely and 38.1 percent for SAIC.

The EU said the amount depended on the level of state subsidies received by the firms.

Electric car producers in China that cooperated with the EU will face a tariff of 21 percent, while those that did not cooperate would be subject to a 38.1-percent duty.

This would be on top of the current import duty of 10 percent.
The tariffs would apply provisionally from July 4 and then definitively from November.

But the EU vowed when it unveiled its plans to hold discussions with China to "explore possible ways to resolve the issues" around subsidies. 
The EU tariffs, while high, are lower than the 100-percent rate the United States imposed from last month on Chinese electric cars.

Europe's automotive sector is the jewel in its industrial crown -- boasting iconic brands such as Mercedes and Ferrari -- but it faces threats including China's head-start in the switch to electric.

Brussels wants to put the brakes on what it claims were unfair practices undercutting Europe's automakers, which face a 2035 deadline to phase out new sales of combustion engine cars.

BSS/AFP/FI/ 1446 hrs